Some Financial Tips For Agri Start Ups

agri start ups

India’s economy depends heavily on agriculture, which is thought to make as close to 18 percent of India’s GDP.

Government initiatives to increase credit availability and market infrastructure, improve investments, and support the growth of the sector’s infrastructure has not gone unnoticed And even though it has evolved from a traditional agriculture sector to one that adopts a modern philosophy, it still faces several difficulties because of a lack of technological resources and financial services.

Numerous entrepreneurs are attempting to close this gap, improve the quality of life for farmers, and boost the Indian agricultural ecosystem by providing them with a variety of solutions.

Financial Tips For Agri Start Ups

Maintain Accurate Records: 

Due to their opaque books of accounts and insufficient business information, startups find it difficult to obtain financing (Kaplan and Stromberg, 2001).

By maintaining accurate books of accounts that demonstrate a true and ethical attitude to business operations, agri tech businesses can draw in more investors.

Customers, staff, and suppliers are examples of additional stakeholders who must keep accurate records of the start-up. Through cloud accounting systems, tax planning, and automatic return filing powered by artificial intelligence, multi-user software can be useful for  Agri Start Ups.

To Open Separate Business Bank Account: 

In accordance with the “business unit” idea, each agricultural start-up business owner is required to keep a distinct bank account for his company in order to keep it separate from the owner’s personal finances. According to the precedent-setting decision Salomon Vs. Salomon Company Limited., a business company must not only provide payment of a fair claim but also provide protection from false claims.

Develop cost-effective and climate-savvy solutions. If agricultural start-ups prioritise SDG13, or climate action, when creating their goods and services, their success rates may increase. Gold Farm, KhetiNext, Oxon, a start-up in the agriculture industry, raised $13 million by making its services accessible to small and marginal farmers.

Developing A Realistic Budget: 

Agri Start Ups must develop a realistic budget by verifying their financial estimates. In order to make sure everything is in order, they must also check their performance utilising the CEO Dashboard (Sales, Expenses, Profit, etc.) every quarter.

Ideal Use Factors Of Production: 

By adopting an asset-light strategy and obtaining funding internally, agricultural start-ups can raise their total factor productivity. For instance, start-ups may decide to lease complex machinery/equipment during their early stages in order to reduce expenses and maximise returns.

Managing The Flow Of Funds: 

The cash flow statement X-rays the financial well-being of a start-up, whereas the profit and loss account scans the operations of the company. In essence, their cash flow is improved via lean inventories and speedy receivables.

Therefore, in order to satisfy the needs of suppliers, bankers, investors, and the like, agribusiness owners must manage their cash flows, both short-term and long-term.

Although start-ups may turn to equity after expanding internal resources, firms often follow the “pecking order hypothesis” to mobilise their financial resources (internal finance, debt, and equity in that sequence). Due to their innovative business strategy.

investing in angels:

A start potential up’s is often measured as an internal rate of return to investors and extends well beyond its track record and prior accomplishments (Gompers & Lerner, 1998). Before investing in agro start-ups, consider, among other things, angel investors, valuation mismatch, exit options, and regulatory and tax difficulties.

Additionally, moral hazard and unfavourable selection might come from information asymmetry at start-ups. Ninjakart, an agricultural start-up operating in the supply chain, raised $164 million from angel investors by tackling these issues.

Developing a solid network

Any entrepreneur’s net worth is their network. Despite the fact that agricultural start-ups employ tiny teams, they nevertheless need to network with numerous financial professionals, technology whizzes, and agricultural specialists.

Stallapps and Sid’s Farms are two agricultural start-ups that digitise the dairy supply chain by relying on cutting-edge technology and networking apps to create connections between markets.

Risk Administration: 

For any business owner, each day is a fresh start. Agricultural start-ups must manage their inherent risks, such as those related to credit, markets, and operations, with care because they are seasonal businesses.

ESG Factoring Using a business model

Agricultural start-ups can expand their business models sustainably as the ESG (Environmental, Social, and Governance) market gains traction. One illustration is Licious, India’s first D2C unicorn, which won the Thought Leadership Award in 2021 for adhering to ESG standards.

Overall, agriculture start-ups need to concentrate on their financial health by relying on competent young and digital technologies, in addition to providing clients with excellent goods and services at fair pricing on time.

Agriculture start-ups will quickly become unicorns or decacorns if they successfully handle innovation, financing, and marketing.

Also Read:- Personal Finance Tips: How to improve your finances



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